A Limited Liability Partnership or LLP is a legal enterprise that allows partners to enjoy the benefits of a partnership while also maintaining the legal protection of a separate legal entity.
An LLP combines the benefits of a partnership and a corporation. It offers its partners limited liability protection, shielding them from personal liability for the company’s debts and obligations. In an LLP, each partner is responsible only for their own actions, making it an attractive option for professionals and small businesses. Registering an LLP brings several benefits, including flexibility in management and operations, tax advantages and ease of compliance.
Obtaining Director Identification Number (DIN)
The DIN is a unique identification number assigned to individuals who wish to hold a position as a director in a company or a designated partner in a LLP. It serves as an essential identification and authentication tool for directors/partners in various statutory filings and compliance procedures.
Procedure for obtaining DIN:
To obtain a DIN, the following steps need to be followed:
a. Obtain DIR-3 form: First of all, the applicant should obtain the DIR-3 form (which serves as the application for allotment of DIN) from MCA website or professional service providers.
b. Complete the details: The applicant should then provide accurate personal information, including full name, date of birth, residential address, contact details, educational qualifications, etc.
c. Attach supporting documents: The application should be accompanied by supporting documents like identity proof ex. Aadhar card, address proof ex. passport, driving license and passport-sized photograph.
d. Verification and submission: The DIR-3 form that has been duly filled along with the supporting documents, should be verified and signed by the applicant before submitting it electronically on the MCA portal.
e. Payment of fees: After submission, the applicant is required to pay the prescribed fee for DIN allotment, which again can be paid online through the MCA portal.
Upon successful verification and payment, the MCA will process the DIN application. Once approved, the DIN is issued and the applicant will receive the unique identification number, which can be used for various business and compliance purposes.
Document Preparation And Drafting
The preparation of following documents is necessary to initiate the next step of registration of LLP:
- Drafting the LLP agreement:
The LLP agreement governs the internal workings, rights and also the responsibilities of the partners in a LLP. It serves as a legally binding agreement between the partners and outlines the terms and conditions agreed upon by all parties involved, ensuring clarity and transparency in the operations of the LLP.
The key components typically included in an LLP agreement are:
- Name and address of the LLP
- Names, addresses and contributions of partners
- Profit-sharing ratio among partners
- Roles, responsibilities and decision-making authority of partners
- Rules for admission, retirement or expulsion of partners
- Procedures for meetings, voting and dispute resolution
- Terms and conditions for termination or dissolution of the LLP
- Preparation of other necessary documents:
Other necessary documents include:
Consent letters and affidavits
In addition to the LLP agreement, certain consent letters and affidavits may be required during the LLP registration process. These documents affirm the consent and willingness of the partners to become part of the LLP. They typically include:
- Consent to become partners or designated partners in the LLP
- Consent to act as designated partner
- Declarations of non-disqualification or eligibility
Address proof and identity proof documents
During the LLP registration process, it is essential to provide valid address proof and identity proof documents for all partners. These documents serve as a means of verification and include:
- Passport
- Aadhaar card
- Driver’s license
- Voter ID card
- Bank statements
- Utility bills
The preparation of these documents ensures compliance with legal requirements and establishes the foundation for the functioning of the LLP.
Filing The LLP Registration Application and Paying Registration Fees
The following steps are next for filing the application:
- Online registration process:
The online registration process involves:
Creating an account on the MCA portal
To initiate the LLP registration process, the first step is to create an account on the official website of the Ministry of Corporate Affairs (MCA). This account will provide access to the online services and forms required for LLP registration.
Filling the LLP registration form
Once the account is created, the next step is to fill out the LLP registration form. The form typically includes details such as the proposed name of the LLP, registered office address, partners’ information and designated partners’ information. It is essential to ensure that accurate and complete information is provided in the form to avoid any delays or rejections.
- Required information and documents:
Following are the necessary documents required:
Details of partners and designated partners
The LLP registration form requires the necessary information about the partners and designated partners of the LLP. This includes their names, addresses, contact details, DIN (Director Identification Number), PAN (Permanent Account Number) and their roles and responsibilities within the LLP.
Registered office address proof and documents
Proof of the registered office address is a crucial requirement for LLP registration. Documents such as utility bills (electricity bill, telephone bill, etc.), rent agreement or ownership documents must be provided as evidence of the registered office address. These documents should be recent and in the name of the LLP or the owner of the premises.
- Paying The Registration Fee:
LLP registration involves the payment of prescribed fees. The fee structure is determined by the MCA and may depend on various factors such as the contribution amount, the number of partners and the state in which the LLP is being registered.
LLP Registration Approval And Post-Registration Steps
The final step towards LLP registration involves:
- Verification and scrutiny by the Registrar of Companies:
This includes:
Processing and timeline for approval
Once the LLP registration application is filed, it undergoes verification and scrutiny by the Registrar of Companies (RoC). The RoC examines the application, ensuring compliance with the necessary legal requirements and documentation. The processing time for approval can vary, but typically it takes around 10-15 days, depending on the workload and efficiency of the RoC.
Possible queries and clarification requirements
During the verification process, the RoC may raise queries or request clarifications regarding the LLP registration application. These queries could relate to the provided information, documents or any other specific details.
- Issuance of Certificate of Incorporation (CoI):
The CoI is issued by the Registrar of Companies (RoC) upon successful LLP registration and serves as legal proof of the existence of the LLP as a separate legal entity. The CoI includes important details such as the LLP’s name, registration number, date of incorporation and registered office address and is required for various business transactions, opening bank accounts, obtaining licenses and entering into contracts.
Post-Registration Compliances And Obligation
The post registration compliances include:
Obtaining PAN and TAN:
After registration of LLP is complete, it is necessary to obtain a PAN and TAN from the IT Department. While PAN is used for tax purposes, the TAN is required for deducting and remitting taxes and thus the partners must apply for PAN and TAN and comply with the associated tax obligations.
Goods and Services Tax (GST) registration, if applicable:
If the LLP engages in the supply of goods or services and meets the eligibility criteria, it must register for GST as well as it ensures compliance with indirect tax regulations and enables the LLP to collect and remit GST to the government.
The Bottom Line
In conclusion, registering a Limited Liability Partnership (LLP) offers numerous benefits, combining the advantages of a partnership and a corporation. LLPs provide limited liability protection to partners, allowing them to shield their personal assets from the debts and obligations of the business.
By following the step-by-step process and fulfilling post-registration obligations, entrepreneurs can establish and run their LLP efficiently and effectively.
For more details, connect with our experts at StartupFino.
